The Indian rupee opened weaker and hit a record low of 96.25 against the US dollar in early trade on Monday, down 44 paise from its previous close of 95.81. According to CR Forex Advisors, elevated crude oil prices (Brent at $111.26), a stronger dollar, and escalating US-Iran tensions pressured the currency significantly. Forex experts warned of further downside risks, with 100/USD possible if tensions persist, as the combination of rising oil prices and dollar strength creates additional pressure on the rupee. Technically, 94.80–95.10 is expected to act as an important support zone for USDINR, while 96.00–96.50 remains a strong resistance area in the near term.
Prime Minister Narendra Modi visited the UAE on 15 May as the first leg of his five-nation visit, holding discussions with UAE President Sheikh Mohamed bin Zayed Al Nahyan. According to PIB, both countries are committed to expanding cooperation across strategic, economic, technological, and social sectors. The highlight of the PM's visit was the signing of pacts on strategic petroleum reserves and the supply of liquefied petroleum gas by the two countries. The strategic collaboration between Indian Strategic Petroleum Reserves Limited (ISPRL) and Abu Dhabi National Oil Company (ADNOC) is expected to increase ADNOC's crude oil storage in India for up to 30 million barrels and may potentially lead to the setting up of strategic gas reserves in India. The UAE has also committed $5 billion investment in Indian infrastructure, with Indian exports to the UAE being almost duty-free, boosting India's exports significantly.
Global crude oil prices extended significant gains on Monday, 18 May as escalating tensions between the US and Iran fueled concerns over supply disruptions. According to reports from Zee News, international oil benchmark Brent crude rose as much as 2.37 per cent or $2.60 to $111.86 per barrel, while US West Texas Intermediate (WTI) crude advanced 3.11 per cent, or $3.28, to $108.70 per barrel. In domestic markets, crude oil futures (June 18) on Multi Commodity Exchange (MCX) traded at ₹9,978, an increase of 3.02 per cent or around ₹300. This follows a rally of more than 7 per cent in the preceding week alone, as hopes for a diplomatic settlement dimmed and military incidents multiplied around the Strait of Hormuz.
Oil markets gained further momentum after a fresh wave of drone strikes targeted the UAE and Saudi Arabia, while escalating rhetoric from Washington and Tehran fueled fears of a wider regional conflict. As reported by Zee News, nearly one-fifth of global oil and liquefied natural gas shipments pass through the Strait of Hormuz, making it a key export route for major producers such as Saudi Arabia, Iraq and Qatar. The Strait of Hormuz has been effectively closed since the US-Iran war started on 28 February, creating one of the biggest economic challenges for India in recent months. However, the UAE's Abu Dhabi Crude Oil Pipeline can transport about 1.5 million bpd directly to Fujairah in the UAE, bypassing Hormuz and ensuring a safe and secure oil supply. For India, this ensures more stable, faster, and potentially cheaper oil supplies with stronger UAE ties and higher output flexibility.
US President Donald Trump also signalled a tougher stance on Iran, saying he had agreed with Chinese President Xi Jinping that Tehran must not be allowed to develop nuclear weapons and should reopen the Strait of Hormuz. According to reports from Zee News, in a post on his Truth Social platform, Trump warned Iran that 'the clock is ticking,' signalling growing pressure on Tehran amid stalled diplomatic efforts. With diplomatic channels between the US and Iran showing no immediate sign of reopening, energy markets are bracing for continued volatility in the sessions ahead. Asian equity markets traded mostly lower in response to the risk-off mood, with Japan's Nikkei falling around 1 per cent and Hong Kong's Hang Seng declining over 1 per cent, while South Korea's KOSPI bucked the trend with a gain of nearly 1 per cent. On the domestic equity market front, Sensex tanked 833.20 points to 74,404.79 in early trade, while the Nifty was down 234 points to 23,401.70.
